When one thinks of Dick Bove, one usually recalls this little note issued 3 weeks before Lehman's bankruptcy:
“If one assumes that the Neuberger Berman subsidiary is worth somewhere between $9 to $13 billion, the rest of the company is being valued at less than zero. A valuation of this nature would only make sense if the company were to go out of business and then still owe money to its creditors, which of course could not happen. Once it is bankrupt, it is bankrupt.”
“A deep pocket buyer would not be under any pressure to sell any assets. It could wait until they mature. It could sell Neuberger for more than the value of the whole company and basically own Lehman Brothers for nothing.”
Richard X. Bove, 8/21/2008
And, of course, of this exclusive interview on CNBC in which Dick justified his upgrade of Lehman to a Buy on the same day:
In an exclusive interview on Fast Money Bove said, “If you take a look at Neuberger Bergman (the asset management arm of Lehman that’s likely up for sale) and you make the assumption that at its low point it’s worth $9 billion and you subtract that from the market cap of Lehman, it means the rest of the company is worth less than zero. That suggests you get all the rest of Lehman for nothing.”
Dylan Ratigan questions that theory. “But all of Lehman for nothing could include a vast liability on the mortgage side?”“But let’s assume the buyer is a bank," replies Bove. "There’s no need for them to sell these assets on a fire sale basis. They can hold onto them until they mature. The vast majority of the assets are cash flowing. So if you can sell Neuberger Bergman for more than you pay for all of Lehman you would get Lehman for nothing.”
Our condolences to whoever listened to Mr. Bove in the torrid days of last summer, where any money used for LEH stock purchases ended up worth exactly $0.00 less than a month later.
Yet Mr. Bove, unfazed that his reputation precedes him, makes what appears to be an exclusive appearance on Business Insider, where he decries not only the recent spate of inquiry into the Merrill merger, but hopes that people would just stop talking about this whole Lehman fiasco.
In a report released today, Dick Bove takes aim at everyone who’s taking aim at the bank.He says that the bank ‘s legal entanglements are “distracting management and costing shareholders money."
He addresses the SEC first. Basically, he says the SEC requested that BofA pay a fine because of those bonuses paid to Merrill employees. Now that judge is reviewing that fine, the SEC should just drop the case altogether because “simply asking the company to pay a fine would not right the wrongs being argued against this company.”
Then Bove takes on Cuomo, accusing the attorney generals of going after his own constituents.
“To my knowledge, the attorney general in Michigan does not bring charges against the automotive industry. Texas is not attacking the oil industry and Florida is not suing the tourist industry,” Bove writes.
And New York State too should drop its complaints against Wall Street. Bove writes the state government is “unique in believing that its citizens should be penalized for being successful.” Why would a strapped state government object that “a bunch of New Yorkers were paid hefty bonuses?” Is it trying to reduce its own tax base?
Finally he takes on the media. Bove says the media is going to overwhelm us with endless Lehman anniversary stories, which will all pretty much say that the government shouldn’t have let it fail. Well, can you imagine if Merrill went down as well? So the media too, should be celebrating the merger.
“There is very little question that the country, its economy, and the financial system are better off because Bank of America bought Merrill Lynch,” Bove concludes.
Immediately thereafter, a publicity desperate Mr. Bove proceeds to immediately retweet the Business Insider article, and his conviction Buy call on Wall Street and SEC integrity.
We hope Business Insider got some compensation for this piece, or at least some free glossy Rochdale research reports. Thus they (and they alone) would be aware if Dick Bove recently issued an upgrade to a Conviction Buy on Lehman's bankrupt stock, explaining its meteoric rise from $0.05 to $0.20 and yonder.
As for Bove's assumptions that all was prim and proper in Merrill lack of disclosure of its $4 billion bonus payments on the verge of its taxpayer funded acquisition, which the SEC already said was worthy of an earth-shattering $33 million penalty of taxpayer money, we believe the court (Judge Rakoff) has yet to voice on that. Additionally, one wonders what under what authority does a financial analyst (as highly respected as he may be) go and recommend how an Attorney General should do his job. One does not see Andrew Cuomo telling Mr. Bove to issue a Strong Buy rating on Bank of America... which may be a moot point seeing how the rather unpessimistic Dick Bove very likely has already done so: if any readers actually follow his output, please advise.
As for the media keeping mum on Lehman, yeah - we kinda sense there is a slight tension there, as the last thing needed is for someone to go ahead and recall Mr. Bove's horrific stock recommendation on the bankrupt firm, which may put a slight dent on Bove's otherwise pristine stock picking record.